Birmingham City are being charged interest at 11.9 per cent on tens of millions of pounds in loans from its parent company, it has been revealed in new accounts.
Birmingham were able to make a £21m net spend on transfers after relegation last season because League One has different financial rules to the Championship, where, in short, clubs are limited to a £13m football loss per year. In Leagues One and Two, owner investment counts as income, which it doesn’t in the top two divisions.
The figures have been detailed today in the first accounts published under the ownership of Knighthead Capital Management, which confirm a £16.1m loss for 2023/24 – before that summer window. That is despite income rising 45 per cent to £28.7m because the wage bill went up 17 per cent to £33.7m.
The club entered into a facility agreement with Knighthead that made funding of up to £50m available. That was extended to £100m in October, 2024.
A strategic report from director Garry Cook in the accounts adds: “The facility… attracts a fixed interest rate of 11.90 per cent. As of June 30 2024, an amount of £48.1m has been provided to Birmingham City from Birmingham City Limited and Knighthead under the loan agreement.
“On October 3, 2024, a deed of amendment was entered into between the company, BCL and Knighthead extending the loan facility to £100m. As of June 30, 2024, the total amount owing from BCL to Knighthead including interest and loan reassignments is £72.2m.”
Knighthead completed its takeover of Birmingham in July 2023. They brought in almost £13m from sponsorship deals, compared to £6.2m in the previous season. Knighthead also bought the naming rights to St Andrew’s and the club’s Wast Hills training ground midway through last season for around £4.2m.
They made 17 signings last summer, led by the arrival of Jay Stansfield from Fulham for a fee in excess of £10m, and are on the cusp of securing promotion back to the second division at the first attempt.
BirminghamLive report: “Knighthead’s plan to compete in the second tier has always centred around increasing revenue by attracting bigger sponsorship deals. Blues have attracted several big-name commercial partners since Knighthead took control in July 2023, including US-based apparel brand Undefeated who are the club’s front of shirt and training wear sponsor. The likes of Delta Airlines and Vertu Motors have joined the party this season but their investment isn’t included on this set of accounts.
“Knighthead have also placed greater emphasis on improving the fan experience at St Andrew’s @ Knighthead Park to encourage supporters to spend longer in and around the stadium. The accounts report that Knighthead have spent almost £9m on improvements to St Andrew’s and the club’s training facilities since the end of last season. Crucially, infrastructure costs don’t count towards a club’s Profit and Sustainability (P&S) totals.”
They add: “While the Stansfield fee is disputed, it is common knowledge that Blues spent more than any other League One side has in history. The signings of Christoph Klarer, Tomoki Iwata and Willum Willumsson also came at a price most of their League One rivals could not afford.”
Luton Town have also published their accounts for 2023/24, when they were playing in the Premier League, to further emphasise the differences between the three divisions.
Luton, who are currently in a relegation battle with Stoke City in the Championship, increased their revenue 618 per cent to £132m and saw the wage bill rocket 106 per cent to £57m, which football finance expert Kieran Maguire calculated meant an average weekly wage of £26,435.
The club made an underlying profit of £47m compared to a loss of £21m 12 months previously.
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